ABSTRACT
In his writings, Charles Dow was reticent to recommend any particular strategy for choosing stocks. He did, however, suggest choosing a solid railroad stock, one that paid a good dividend. Today, this would be comparable to choosing a stable utility stock with a “good” dividend. Although the technical discussion is not in-depth, trendlines, support and resistance play a key role in buying and selling stock. These are the same type of levels, showing support and resistance, discussed in the chapter on the technical movement of the Dow Averages. Technical analysis of stock price movements in the purest form ignores fundamental information, the analysis of a company’s economic situation, earnings in the company, or changes in the company’s market position. Rather, it looks only at the price movement to give trading signals. It is believed that fundamental economic information confuses the picture and can invalidate the trading signals.
